The institutional proxy advisory business is a duopoly of Institutional Shareholder Services and Glass, Lewis & Co., and they’ve split on the question of whether shareholders should toss three incumbents in the contested election for board seats at Imation Corp., coming to a vote next week.

With them on opposite sides, it’ll be interesting to see which opinion has more influence. The conventional thinking is that the opinion that carries more weight comes from ISS --  and it’s the firm that just recommended that the three incumbents get ousted, that “the dissidents present a compelling case that significant board change is warranted.”

A proxy adviser like ISS, which got its start in 1985, is a firm that suggests the right way to vote on questions put to shareholders too small or too busy to do the research on their own.  

Some institutional fund managers ignore the proxy advisers, and the management teams of companies facing a contested election can reduce their influence by about running around them to lobby for votes directly from their institutional shareholders.

Yet they remain influential, and both sides actively court them in the run up to contested corporate elections.

Glass Lewis, founded in 2003, came out in support of Imation’s incumbents, but it was not exactly a ringing endorsement. Its primary point is that the three nominees for the board and the case for change brought by The Clifton Group, a high profile activist, are also under whelming.

In talking with some large holders of Imation shares, Lake Street Capital Markets analyst Eric Martinuzzi concluded that the proxy adviser backing the dissident slate, ISS, has the ear of more portfolio managers than Glass Lewis has.

Having ISS come out in favor of dumping the three incumbents also makes it a lot easier for the portfolio managers leaning in the direction of change to go ahead and vote their shares for the dissident slate, Martinuzzi said.  If the portfolio managers bucked the ISS recommendation, they would’ve needed to seek approval from senior management at their firms.

As one of his clients put it to him, the ISS report in favor of the dissidents “gives us the air cover I need.”